Tariffs on trial: Trump’s favourite weapon faces a court test today. Why India has skin in the game?

A US Supreme Court ruling on Trump's use of emergency powers to impose tariffs could impact India by affecting tariffs on Indian goods, pressure over Russian oil, and prospects for an India-US trade deal, with uncertainty likely to persist regardless of the outcome.

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A single court ruling in Washington could ripple through global trade and directly affect India’s economic and diplomatic calculations. The US Supreme Court is expected to deliver an expedited verdict on the legality of tariffs imposed by President Donald Trump under emergency powers, a decision that could either rein in his aggressive trade strategy or hand the White House sweeping authority to keep using tariffs as a political weapon.

For India, the ruling matters far beyond legal theory. It could determine whether the steep duties on Indian goods remain, whether pressure over Russian oil intensifies, and whether the long-stalled India-US trade deal has any real chance of revival.

What the Supreme Court is deciding

The Supreme Court is expected to rule on whether Trump had the legal authority to impose sweeping tariffs using the International Emergency Economic Powers Act or IEEPA. The law allows the president to take economic action during a national emergency, but it does not explicitly grant the power to impose tariffs.

Lower courts have already ruled against Trump. The US Court of International Trade held that IEEPA does not “delegate an unbounded tariff authority to the President” and said the tariffs were unlawful not because they were unwise, but because federal law did not allow them. That ruling was upheld by the US Court of Appeals for the Federal Circuit.

The Supreme Court is now weighing two key questions. First, whether IEEPA actually gives the president the authority to impose tariffs at this scale. Second, if those tariffs are deemed illegal, whether the US government must refund importers who have already paid them.

Why this ruling is crucial for India

India has been among the countries most affected by Trump’s aggressive tariff policy. In August last year, Trump doubled tariffs on Indian goods to 50 percent, the highest rate imposed on any major trading partner. A quarter of that was explicitly linked to India’s purchase of Russian crude oil.

Trump has been unusually blunt about using tariffs as punishment and leverage. He has said tariffs are his favourite word and has repeatedly warned that Washington could raise them further if India does not change its energy policies.

If the Supreme Court upholds Trump’s use of emergency powers, it would effectively validate this approach. It would give the president broad authority to impose or raise tariffs with minimal congressional oversight. That would keep India under sustained tariff pressure, especially as Washington pushes New Delhi to reduce oil imports from Russia.

The trade deal angle

The ruling also has implications for the stalled India-US trade agreement. Talks have dragged on through six rounds of negotiations, with tariffs remaining the biggest sticking point.

US Commerce Secretary Howard Lutnick recently claimed the deal fell apart because Prime Minister Narendra Modi did not personally call Trump. “I set the deal up. But you had to have Modi call President Trump. They were uncomfortable with it. So, Modi didn’t call,” Lutnick said in a podcast.

He added that the US has since stepped back from the deal. “The US has stepped back from that trade deal that we had agreed to earlier. We are not thinking about it anymore,” Lutnick said.

India is seeking a tariff rate closer to what the US offered Britain and Vietnam, but Lutnick said that offer has expired. Meanwhile, Indian exporters continue to suffer under the 50 percent tariff regime, even as bilateral trade remains strong.

If the Supreme Court curtails Trump’s tariff powers, it could force the administration back to the negotiating table and reduce Washington’s leverage. If it does not, tariffs remain a blunt instrument hanging over the talks.

The refund bombshell

Another major issue is money. If the Supreme Court rules against the Trump administration, the US could be forced to refund importers for tariffs already collected. Reuters has reported that this could involve nearly $150 billion.

Between February 4 and December 14, the administration collected $133.5 billion in IEEPA related tariffs. Trump has warned that losing tariff authority would be a “terrible blow” to the US.

Industry leaders are sceptical about refunds. “It’s not in the government’s DNA to give back money. And Trump would not want to give back money,” Jim Estill, CEO of Danby Appliances, told Reuters.

For India, refunds would not directly compensate exporters, but they would weaken the credibility of the tariff regime and embolden challenges to future trade penalties.

Even if Trump loses, tariffs may stay

A ruling against Trump would not necessarily end the tariff saga. The administration has already signalled it has alternative legal routes. US Treasury Secretary Scott Bessent has said there are at least three other mechanisms under the 1962 Trade Act that could be used to keep tariffs in place.

Economists believe Trump would simply shift tactics. Jose Torres, senior economist at Interactive Brokers, told CNBC, “If the court blocks the tariffs, the administration is going to find workarounds. President Trump is very ambitious in getting this agenda through despite potential controversies that could surround such a decision.”

That means uncertainty will persist for India regardless of the verdict.

A wider warning about executive power

Legal experts have warned that the case is about more than trade. Timothy Meyer, professor of international business law at Duke University, told Fortune that a broad interpretation of IEEPA could dramatically expand presidential power.

“The law at issue here doesn’t only apply to imports,” Meyer said. “If the government were to win just on this interpretation of this law, the president would have the ability to tax.”

Justice Neil Gorsuch echoed similar concerns during earlier hearings, saying, “Congress, as a practical matter, can’t get this power back once it’s handed it over to the president.”

What to watch next

For India, the Supreme Court ruling is not just a legal event in Washington. It could determine whether tariff pressure intensifies, eases, or simply changes form. It will also shape the future of India-US trade negotiations at a time when exporters are eager for relief.

Whatever the outcome, one thing is clear. Tariffs have become central to Trump’s foreign policy playbook, and today’s decision will decide how far that power can legally go.